Executive summary:
- Long term, buy and hold insurance investors have been rewarded by positive outperformance
versus the broad corporate credit market and, since 2012, versus global non financial high yield. - Despite some tightening since March 2020 wides, spreads on Insurance Bonds remain at
attractive levels - Insurance continues to offer a complexity premium to other credit sectors that is not justified by
strong industry fundamentals - Robust Solvency II capital ratios support this fundamentals view, as do predominantly
investment grade ratings and low long term industry default rates - Coupons are generally sustainable and are expected to continue to be paid during this period
of COVID 19 led stress - However, credit risks are not uniform across the sector, reinforcing the importance of extensive
fundamental analytics
